Across the nation, state tax collections in the first three quarters of 2009 posted their steepest decline in at least 46 years, according to a report this month from the public policy research arm of the State University of New York.

At least 30 states raised taxes in their most recently completed fiscal year — which ended in most cases in mid-2009. Even more cut services. All told, states raised $117 billion to fill last year’s budget gaps, the Pew Center on the States estimates.

Yet despite all those new taxes and deep cutbacks, pressure on state finances continues to build. Economists warn that without a new round of federal stimulus spending, states could face another round of layoffs that could kneecap an already shaky economic recovery.

“We could see a real ripple effect if the states don’t take a balanced approach” by balancing cutbacks with tax raises and other new revenue, said Jon Shure, deputy director of the state fiscal project at the Center on Budget and Policy Priorities in Washington.

State and local governments have cut 132,000 jobs since August 2008, the center says. Fiscal problems appear most acute in California, whose general obligation bonds were downgraded this week after Gov. Arnold Schwarzenegger declared a fiscal emergency.

The state has already said it will increase tuition by a third in the University of California system, among other cash-raising moves. At one point, it was projected to spend nearly 50% more than it stands to garner in revenue in this fiscal year, by one count. California has asked for federal help and warned it could run out of cash in March.

And California’s not the only state facing an almost unfathomable shortfall. Like California, Arizona and Illinois face budget gaps above 40% of projected general fund spending, according to Pew data.

Arizona put its state office buildings on sale this week in a bid to raise $700 million. The University of Illinois furloughed some workers this week after the state failed to come up with $436 million in expected funds. Budget officers in those two states describe their outlooks for fiscal 2010 as “dire,” according to a National Conference of State Legislatures report.

Alaska, Nevada, New Jersey and New York face gaps of at least 30% of their planned general fund spending by the end of this fiscal year. A dozen more states face a fiscal 2010 budget gap of between 20% and 29%.

“California is playing out on the biggest stage, but there are states around the nation facing problems of equal or greater magnitude,” said Corina Eckl, who runs the fiscal affairs program at the National Conference of State Legislatures in Denver. “We are seeing some frightening situations.”

Big shortfalls scare legislators because states by law must balance their budgets every year. After revenue and spending rose steadily in the middle of this decade, bolstered by a housing bubble that boosted employment and fed a stream of property transfer fees, state funding went into freefall when the recession started at the end of 2007.

Given the depth of the recession, few states are expecting an uptick in employment or consumer spending that would translate into bigger tax collections anytime soon. Nine states are forecasting they won’t return to their peak revenue years of 2007 or 2008 until at least 2014.

Adding to the pressure, job losses spur demand for the services states devote the lion’s share of their budgets to: education and Medicaid, which provides healthcare for low-income people.

“The needs grow as states’ ability to meet those needs declines,” said economist Andrew Reschovsky, a professor at the University of Wisconsin in Madison.

So far, the worst cuts have been avoided with the help of billions of dollars of federal stimulus money — including $135 billion for education and Medicaid.

But the flow of those funds will start to slow down in the second half of 2010 and will stop altogether at year-end, unless Congress appropriates more money for state assistance.

States have used $53.6 billion in Medicaid funding through Jan. 8, according to government data. If Congress doesn’t extend the Medicaid funding beyond the end of the year, “states are looking at a stimulus cliff,” said Robert B. Ward, deputy director of the Rockefeller Institute of Government at the State University of New York at Albany.

The only way to make up those shortfalls is through more new taxes, cutbacks and borrowings.

Local and state governments have had little problem borrowing in the bond market, where analysts expect issuance of $400 billion or more this year. California has had to pay higher-than-average interest rates to sell its debt, but there seems to be little fear of a default, given the state’s giant economy and its relatively small $64 billion worth of general obligation bonds outstanding.

But borrowing is no help in fixing so-called structural deficits, in which spending exceeds revenue over a prolonged stretch. And so far there has been little sign legislators are willing to make the obligatory tough choices, particularly issuing more or higher taxes.

Many of the so-called fixes for current state deficits are mere Band-Aids that push the problem forward rather than address it, observers said.

“It’s surprising that political leaders don’t seem to be taking seriously the magnitude of the problems,” said Reschovsky. “You would hope it wouldn’t come to this, but it might take schools closing and programs being eliminated to create a sense of urgency.”

“We are at war. We are at war against al-Qaida, a far-reaching network of violence and hatred that attacked us on 9/11, that killed nearly 3,000 innocent people and that is plotting to strike us again.”

Thus did Barack Obama clear the air as to whether we are at war, and with whom and why.

Following his remarks, during a White House briefing by National Security Council aide John Brennan, Helen Thomas asked a follow-up question to which we almost never hear an answer: Why is al-Qaida at war with us? What is its motivation?

It was Osama bin Laden himself, in his declaration of war in 1998, published in London, who gave al-Qaida’s reasons for war:

First, the U.S. military presence on the sacred soil of Saudi Arabia. Second, U.S. sanctions causing terrible suffering among the Iraqi people. Third, U.S. support for Israel’s dispossession of the Palestinians. “All these crimes and sins committed by the Americans are a clear declaration of war on God, his Messenger and Muslims,” said Osama.

He began his fatwa quoting the Koran: “But when the forbidden months are past, then fight and slay the pagans wherever ye find them, seize them, beleaguer them, and lie in wait for them in every stratagem of war.”

To Osama, we started the war. Muslims, the ulema, must fight because America, with her “brutal crusade occupation of the (Arabian) Peninsula” and support for “the Jews’ petty state” and “occupation of Jerusalem and murder of Muslims there” was waging war upon the Islamic world.

Terrorism, the direct killing of civilians for political ends, is al-Qaida’s unconventional tactic, but its war aims are quite conventional.

Al-Qaida is fighting a religious war against apostates and pagans in their midst, a civil war against collaborators of the Crusaders and an anti-colonial war to drive us out of the Dar al-Islam. On Sept. 11, they were over here—because we are over there.

“If, as Obama said, “we are at war with al-Qaida,” why are we fighting Taliban when al-Qaida is in Pakistan, Yemen, Somalia, and North Africa?”
Nothing justifies the massacre of Sept. 11. But these are the political goals behind the 9/11 attack, and this is why Islamists fare well in elections in the Middle East. Tens of millions of Muslims, who may despise terrorism, identify with the causes for which Osama declared war—liberation of Muslim peoples from pro-American autocrats and Israeli occupiers.

Americans are being killed for the reasons Osama said we should be killed—not because of who we are, but because of where we are and what we do.

Consider. America lost 4,000 soldiers in six years in Iraq, with 30,000 wounded. Yet not one American of the 125,000 soldiers in Iraq was killed in December. Why not? Because we no longer conduct raids, patrol streets, kick down doors and pat down suspects. We have ended our combat operations, withdrawn to desert bases and seem anxious to go home. When we stopped fighting and killing them, they stopped fighting and killing us.

Most Americans today appear content to let Shia and Sunni, Arab and Kurd decide the future of Iraq. And if they cannot settle their quarrels without a civil-sectarian war, why should their war be our war?

According to Gen. Barry McCaffrey, we must now prepare for 300 to 500 dead and wounded every month in Afghanistan by summer.

Why are the Taliban killing our soldiers? Because we threw them out of power, took over their country and imposed the Hamid Karzai regime, and our troops, some 100,000 by fall, are the force preventing them from recapturing their country. We will bleed in Afghanistan as long as we are in Afghanistan.

But if, as Obama said, “we are at war with al-Qaida,” why are we fighting Taliban when al-Qaida is in Pakistan, Yemen, Somalia, and North Africa?

Hamas has used terrorism, but not against us. Hezbollah has used terrorism, but not against us since the bombing of the Marine barracks, a quarter-century ago. And our Marines were attacked in Lebanon because we were in Lebanon, intervening in their civil-sectarian war. Had the Marines not been sent into the midst of that war, they would not have been targeted.

When Ronald Reagan withdrew them, the attacks stopped.

Like Europe’s Thirty Years’ War—among Germans, French, Czechs, Dutch, Danes, Swedes, Scots and English, Catholics and Protestants, kings, princes and emperors—the Muslim world is roiled by conflicts between pro-Western autocrats and Islamic militants, Sunni and Shia, modernists and obscurantists, nationalities, tribes and clans. The outcome of these wars, the future of their lands—is that not their business, and not ours?

The Muslims stayed out of our Thirty Years’ War. Perhaps we would do well to get out of theirs. But as long as we take sides in their wars, those we fight and kill over there will come to kill us over here.

This is payback for our intervention. This is the price of empire. This is the cost of the long war.

Leo Braudy says there’s only a few minutes left YET he finds time for himself to ask two more questions! When does a panel discussion ever end, go to the Q and A and THEN go back to the moderator asking even more questions of the panel? (when you want to serve Israel’s agenda) :

US Support of Israel’s brutal oppression of the Palestinians PRIMARY MOTIVATION for tragic attacks on the World Trade Center on 9/11 and earlier in 1993 as well (look up ‘Israel as a terrorist’s motivation’ in James Bamford’s ‘A Pretext for War’ book as well):